Mastering Customer Engagement Challenges in Retail Banking Maximizing customer relationships while minimizing risk and complexity

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1 Mastering Customer Engagement Challenges in Retail Banking Maximizing customer relationships while minimizing risk and complexity The economic environment for banks has changed significantly following the recent global financial crisis. There is increased scrutiny and regulation, declining profitability of core operations, changes in consumer behavior and expectations and an ever-present need to trim costs. Because bank products are perceived as a commodity in the majority of global markets, consumer ties to a banking brand are fairly low. These trends mean that customer relationships are top of mind the ability to increase value, foster loyalty and promote positive word-of-mouth can help banks stand out in this challenging global marketplace. Banks are seeking to improve customer service by creating differentiation through streamlined processes and initiatives as well as increased convenience through reduced complexity. This is essential in the current environment, considering they also struggle to restore profitability among a customer base that is more risk-averse and less trusting. The New Face of Retail Banking The near global financial meltdown of the late 2000s shook the institution of retail banking to its very core. Banks can no longer create homogeneous products and services and expect customers to simply purchase them. In mature markets, shrinking profit margins are proof that operations need to focus on processes and the client. In emerging markets, large percentages of consumers either do not use or are underutilizing retail banks. In both situations, in order to increase profitability, financial institutions need to move beyond organizational silos, infrastructure complexities and other internal and external constraints to create an environment that delights the customer and creates long-term loyalty. How will retail banks accomplish this transformation? Financial institutions are focused on increasing the bottom line in many cases doing more with fewer resources, resulting in the reduction of human capital. Contact center agents often lack ready access to valuable customer information housed in the CRM system limiting cross-sell and up-sell opportunities. Operations are siloed, restricting the ability to provide real-time reporting and analytics on customer interactions, leading to poor management decisions, inefficient workforce management and agent attrition. And transactions are complex and time consuming, frustrating customers and leading to increased defection. Only a streamlined solution can break down the barriers, produce more efficient customer interactions and improve profitability. Nearly 90 percent of global bankers believe that transforming from the status quo is critical to profitability. Tomorrow s banks must become more client centric by leveraging sophisticated insights to improve risk management, pricing, channel performance and client satisfaction Aspect Software, Inc. All Rights Reserved.

2 The Customer Service Imperative Retail banks win by getting, keeping and growing customers. Customers create value for banks by buying more products and services more often and thereby increasing the banks profitability. Overcoming the challenge of adding new customers, keeping them longer and increasing their value starts with understanding the quality of customers experiences. Impact of superior customer service % of consumers are more willing to make additional or repeat purchases 15.8% of consumers are less likely to defect to a competitor 16.6% of consumers are more likely to recommend a product or service In markets where consumers can apply for residential loans, 21.6 percent said their lender used too much technical jargon and 20.7 percent said finding a lender that was easy to work with was challenging. And 19.1 percent of borrowers considered these particular problems more difficult than the amount of time it took to find a loan. Customers often compare these experiences as more stressful than waiting to hear if they got a job that they applied for. Customers are well connected and not only share these types of experiences through social media but are also influenced by other consumers experiences good or bad. These influences can easily and quickly persuade consumers to purchase or consequently not purchase a retail bank product. Whenever a retail bank customer decides to reduce future purchases because of a poor experience, the bank has immediately lost value. Future cash flows and long-term profitability are also negatively affected. Today s banking experience is perceived as so confusing that many customers react with high levels of stress and frustration accompanied by the potential for distrust. Nearly a quarter of consumers who have switched their main bank cited loss of trust as their reason. While banks have always sold the notion of trust, they now have to take more concrete steps to cement their credibility if they want to keep customers and increase their wallet share. Securing customers trust requires better understanding their needs by mining data, using behavioral analytics and other tools and applying the information they glean to create a more personal experience. According to Ernst and Young Three clear priority areas are emerging alongside rebuilding trust: focusing on strengthening the brand, segmenting the customer base to further personalize product and service offerings and making measurable improvements to service quality. Money is simple. The art is raising trust and dealing with people. 3 With these priorities in mind, retail banks have a significant opportunity to streamline their internal processes and workforce to provide integrated, consistent interactions that build consumer trust whether conducted through self-service portals, direct conversation, social media or other online channels. Aspect and Microsoft help retail banks optimize existing resources, allowing their contact centers to do more with less by driving efficiencies at every stage of the process. Contact centers are equipped to understand a customer s immediate needs. They can leverage not only CRM information but also enterprise-wide interaction details to proactively deliver differentiated, one-to-one, loyaltybuilding service that reduces attrition by delighting customers. With this new level of trust, banking customers become long-term partners who invest in additional financial products and services, generating additional revenue for retail banks. 2 Industry Brief Mastering Customer Engagement Challenges in Retail Banking 2012 Aspect Software, Inc. All Rights Reserved.

3 The Importance of Risk Management Banks continue to face varying dimensions of risk associated with customer defaults, compliance and operations. Thus, improving risk management by eliminating operational silos, increasing transparency and implementing consistent risk management practices will almost always be their mandate. Inability to collect debt drives down profit for banks but better visibility into the customer may reduce this risk. Agents can make better decisions based on their holistic view of customer interactions with analytical applications that provide information such as a customer s credit rating, income, propensity to purchase and payment patterns on loans. But despite best efforts, some customers will still fail to pay on an obligation. Proactive collection strategies informed by captured customer data can help identify a loan default risk early on, offset the cost of write-downs and maintain customer satisfaction. Real-time and historical business intelligence is used to improve outbound campaign calling strategies and effectiveness enabling collections to call customers at the right number at the right time to optimize recovered revenues. Staffing costs are reduced not only by streamlining the agent desktop and workflow but also by automating early stage collection activity with self-service and pay-by-phone functionality. Customers are satisfied with the outcome of their interactions and retail banks minimize bad debt and staffing costs. After the global financial crisis hit, new compliance policies were introduced in many countries. Retail banks can reduce their risk from not meeting the new regulatory compliance guidelines by utilizing Aspect s workforce management tools to ensure that contact center agents are appropriately coached on the implications of noncompliance. For example, with the new Dodd-Frank Wall Street Act, interactions with mortgage applicants are monitored through sophisticated analytical tools that can identify compliance weaknesses. Supervisors can send automated training communications to mortgage originators, addressing knowledge issues quickly and efficiently. Automated SharePoint workflows notify mortgage originators when a value changes in an approval process (e.g., FICO scores, interest rates or income), so that immediate corrective action can be taken minimizing potential punitive consequences. Another area of retail banking risk is in the treatment of sensitive customer information. In many situations, purchasing a financial product requires multiple forms, each containing private customer information such as income, home addresses and phone numbers. Operationally, this information is usually secured in a file and manually transferred from approver to approver. At any point in the process the information can be compromised, putting both the retail bank and consumer at risk for identity theft. Aspect and Microsoft can create secure workflows that will protect sensitive information through automated approval processes reducing risk exposure. Files no longer reside on desks waiting to be forwarded from individual to individual for approval. Through automation, agents have a 360-degree view of where a customer s application is and can respond quickly to status requests. And SharePoint workflows can be established to proactively communicate milestone events so the customer is informed at every step in the approval process reducing calls to the contact center. Customers begin to trust the process again, increasing customer service satisfaction levels. Operational risk also exists from the standpoint that as financial institutions grow and become more global, they increasingly depend on IT reliability. Downtime can cause significant exposure as customers are making deposits and banks are transferring funds between branches. Sensitive customer information can be lost creating exposure to identity theft. These issues have contributed to higher demands for capacity and system availability. Aspect has been verified by independent consulting groups such as Miercom to meet the stringent demands of today s retail banking environment, minimizing customer risk. It is information technology which enables banks in meeting such high expectations of the customers who are more demanding and are also more techno-savvy compared to their counterparts of the yester years. They demand instant, anytime and anywhere banking facilities. 4 3 Industry Brief Mastering Customer Engagement Challenges in Retail Banking 2012 Aspect Software, Inc. All Rights Reserved.

4 The Reduction in Processing Complexity Consumers don t appreciate surprises and want to be able to depend on their retail banks for timely, accurate information on products and services that meet their needs. Complexity in the banking process results from many factors. Most important is the high value of the majority of banking products Overall, retail banks are facing a tough environment and a strong, strategic focus on getting back to basics will help see them through. 5 and the associated risk of default, which force retail banks to implement security provisions against potential insolvency. Implementation of such provisions requires the lender to secure numerous documents from an applicant before a loan decision can be made. This situation presents retail banks with a dilemma: how to optimize their processes and reduce redundant activities in a way that allows for quicker sell and up-sell closures while minimizing risk. Retail banks can reduce complexity in their customer processes. When customers use a self-service portal, their information is seamlessly transferred to customer The goal of improving customer service agents, eliminating the need for repetitive questions and data entry satisfaction is driving banks to creating a positive interaction. Agents initiate workflows within Microsoft automate their processes. It s not SharePoint instead of multiple systems, automating document routing, management about saying hello and being friendly. Rather, it s about the and approval and reducing the number of touch points needed to process process customers have to go customer requests or application approvals. Proactive outreach, through the channel through. 6 of choice, informs the applicant at milestone events in order to reduce or even eliminate the need for time-consuming follow-up. By lessening process complexity, retail banks have more time to pursue new business opportunities while customers have the information they need, how and when they need it elevating customer service levels. The Aspect Difference Aspect molds unified multi-channel interaction, effective people management and technology expertise with Microsoft enterprise technologies such as SharePoint, Lync, and Dynamics CRM, providing capabilities for retail banks to engage in enterprise collaboration, social engagement, advanced analytics and workforce optimization and automation. With Aspect s 30+ years of experience as a contact center leader, we can tailor these capabilities into innovative applications that solve known business challenges (e.g., customer engagement, risk management or process simplification) or create new applications that are uniquely suited to manage the mortgage lifecycle. Aspect creates a technical infrastructure that helps provide differentiated service through anticipatory outreach to potential customers. The short-term gain is an increase in incremental revenue through cross-sell and up-sell opportunities. The long-term advantage is increased customer retention, increased revenue from new customers and increased loyalty through an elevated focus on the customer experience. An example of this infrastructure comes from the Affinity Group. The Affinity Group enabled a rapid response, proactive engagement and workforce optimization solution that leveraged Aspect inbound and outbound functionality as well as quality and workforce management capabilities. As a result, the Affinity Group: Increased 80/20 service level goals by more than 19% Decreased abandoned calls by more than 68% over two years Reduced call handle time an average of 30 seconds per call Increased total revenue by nearly 7% Besides the Affinity Group, Aspect and Microsoft worked with FCC Financial to provide front and back office solutions through SharePoint and Lync that create more efficient collaboration for agents, and enable faster customer issue resolution and improved communications within the enterprise. Regardless of the channel customers use (phone, , chat, SMS or web self-service) retail banks are capable of responding quickly and correctly the first time, reducing customer complexity and improving satisfaction. 4 Industry Brief Mastering Customer Engagement Challenges in Retail Banking 2012 Aspect Software, Inc. All Rights Reserved.

5 FCS Financial conquered organizational information silos caused by disparate, non-linked systems with a scalable, centralized CRM solution that can be leveraged enterprise-wide and allows employees quick, easy access to information. As a result, FCS Financial: Significantly improved customer service and response times Positioned the organization for first-year growth of 20% Deployed a solution that can be cost-efficiently customized and scaled Moved customer transactions through the pipeline 30-35% faster Empowered sales with mobile access to the CRM application via smart phone Increased employee satisfaction due to mobile flexibility Experienced better quality and more timely customer service Aspect has been a leading provider of customer contact solutions since the industry s emergence. This success is attributable to superior technology bolstered by Aspect s keen understanding of what it takes to deliver solutions that meet the customer-company relationship expectations of today s empowered consumers. We re experienced in supporting enterprise best practices that efficiently and effectively execute on customer-centric strategies designed to distinguish companies in the marketplace. Aspect helps provide agents with readily available expertise for addressing increasingly complex customer demands. Retail banks can engage the customer across every touch point traditional and emerging whether it s through selfservice or through an agent. Using a single routing engine and a sophisticated routing strategy, they can ensure that any path their customers choose ends with a positive experience. As organizations take advantage of new ways to communicate with their customers and next-generation customer contact technologies, they re empowered to make the customer experience a focal point across the enterprise. This creates exceptional customer experience leadership that translates to additional customers, long-lasting loyalty and positive word of mouth that adds revenue to the bottom line. References 1. IBM Institute for Business Value, From Complexity to Client Centricity With Simple, Smart Service. Srini Giridbra, David Notestein, Shanker Ramamurtby and Likhit Wagle. March Forrester Research, Inc., Customer Experience Index IBM Institute for Business Value, Fit, Focused and Ready to Fight. How Banks Can Get in Shape for the Battle Ahead. Shanker Ramamurtby, Srini Giridbra and Gormac Petit. December Review of Business Research, Role of Information Technology in Banking Industry. Llyas-Ur Rahman, David Sayer, Global Head of Retail Banking, KPMG. Autorek.com, Mary Pilecki, Senior Analyst, Forrester Research, Inc. Business Process Management Moves Beyond Workflow to Business Optimization. Banktech.com. Aspect helped Aurora Bank improve the quality and speed of contact resolution with intelligent, data-directed routing. They can now capture customer credentials and identify who the most qualified agent is to respond and then route accordingly. Because the right agent is handling the interaction, Aurora Bank has experienced improved customer satisfaction, increased collections and reduced agent call time. Corporate Headquarters 300 Apollo Drive Chelmsford, MA office fax Europe & Africa Headquarters 2 The Square, Stockley Park Uxbridge Middlesex UB11 1AD +(44) office +(44) fax Asia Pacific & Middle East Headquarters 138 Robinson Road #13-00 The Corporate Office Singapore (65) office +(65) fax aspect.com About Aspect Aspect builds customer relationships through a combination of customer contact software and Microsoft platform solutions. For more information, visit 5 Industry Brief Mastering Customer Engagement Challenges in Retail Banking 2012 Aspect Software, Inc. All Rights Reserved. 4100US-B 7/12